Tennessee Code Annotated

Title 67: Taxes and Licenses

Chapter 5: Property Taxes

Part 2: Exemptions

TCA 67-5-207: Exemption for certain low income persons.

(a) (1) Property of Tennessee nonprofit corporations that is used for permanent housing of low income persons with disabilities, or low income elderly persons, is exempt in accordance with this section. The property must be financed by a grant under SC 211 or SC 811 of the National Affordable Housing Act, codified in 42 U.S.C. SCSC 12741 and 8013, respectively, or the McKinney-Vento Homeless Assistance Act, compiled in 42 U.S.C. SC 11301 et seq., or be financed or refinanced by a loan made, insured, or guaranteed by a branch, department or agency of the United States government under SC 515(b) or SC 521 of the Housing Act of 1949, codified in 42 U.S.C. SCSC 1485(b) and 1490a, respectively, SC 202 of the Housing Act of 1959, codified in 12 U.S.C. SC 1701q, SC 221, SC 223, SC 231 or SC 236 of the National Housing Act, codified in 12 U.S.C. SCSC 1715l, 1715n, 1715v and 1715z-1, respectively, or SC 8 of the United States Housing Act of 1937, as amended by the Housing and Community Development Act of 1974, codified in 42 U.S.C. SC 1437f. For the purposes of this section, a loan is considered to be guaranteed if the federal housing agency has consented to assignment of a housing assistance program contract as security for the loan. In the case of a property financed or refinanced by a loan, eligibility for the exemption under these programs continues so long as there is an unpaid balance on the loan. Following payment of the loan in full, a property shall continue to be exempt from taxation so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. In the case of a property financed by a grant, eligibility for the exemption under these programs continues so long as the project is restricted to use for elderly persons or persons with disabilities as defined in the programs. The property must be used as below-cost housing for elderly persons or persons with disabilities within the program definitions, who have incomes not in excess of limits established for the enumerated program by the department of housing and urban development (HUD). If a property was approved by HUD for participation in the program without specific low income guidelines, the property may nevertheless qualify for exemption on a pro rata basis, if at least fifty percent (50%) of the low income residents have incomes that would qualify under HUD guidelines for any of the enumerated programs. In such cases the property shall be exempt in the same percentage that low income residents represent of the total occupancy of the property at full capacity, determined as of January 1 each year, on the basis of information supplied to the assessor on or before April 20.

(2) The owners of projects exceeding twelve (12) units shall agree to make payments in lieu of taxes to the tax jurisdictions in which they are located, in an amount negotiated to cover the cost of improvements, facilities or services rendered by the tax jurisdiction, but if no amount is agreed the payments shall be not less than twenty-five percent (25%) of the amount of tax that would be due if the project were not exempt. In no event shall such payments be required of public housing authorities operating under the Housing Authorities Law, compiled in title 13, chapter 20.

(b) To qualify for such exemption, any such not-for-profit corporation must first be exempt from federal income taxation by virtue of qualifying as an exempt charitable organization or as an exempt social welfare organization under the Internal Revenue Code, compiled in 26 U.S.C., and any amendments thereto. In addition, the not-for-profit corporation shall have charter provisions providing in substance that:

(1) The directors and officers shall serve without compensation;

(2) The corporation is irrevocably dedicated to and operated exclusively for not-for-profit purposes;

(3) No part of the income or assets of the corporation shall be distributed to nor inure to the benefit of any individual;

(4) In the event of dissolution of the corporation or other liquidation of its assets, the corporation's property shall not be conveyed to any individual for less than the fair-market value of such property; and

(5) All assets remaining after payment of the corporation's debts shall be conveyed or distributed only to an organization or organizations created and operated for not-for-profit purposes similar to those of the corporation.

(c) All claims for exemption under this section are subject to SC 67-5-212(b).

(d) Subject to the general requirements of this section for exemption of federally assisted housing, there shall also be exempted under this section those properties owned by not-for-profit organizations and funded under the HOME Investment Partnerships Program, compiled in 42 U.S.C. SC 12701 et seq., or the state-funded Housing Opportunities Using State Encouragement (HOUSE) Program. To qualify, the property must be used for permanent housing for low income or very low income persons who are elderly or have a disability.

(e) Nothing in this section shall be construed to preclude the application of SC 67-5-212 to transitional or temporary housing that qualifies as a charitable use of property under that section.

History: Acts 1973, ch. 226, SC 5; 1975, ch. 168, SC 1; 1975, ch. 323, SC 1; 1983, ch. 122, SCSC 1-3; T.C.A., SC 67-509; Acts 1988, ch. 1002, SCSC 1, 2; 1990, ch. 1009, SCSC 1, 2; 1991, ch. 399, SC 1; 1992, ch. 652, SCSC 1, 2; 1993, ch. 454, SCSC 1-3; 1994, ch. 617, SC 1; 1994, ch. 645, SC 1; 1997, ch. 347, SC 1; 2002, ch. 704, SCSC 1-4; 2008, ch. 1104, SC 1; 2009, ch. 111, SCSC 1, 2; 2011, ch. 47, SCSC 74, 75; 2014, ch. 887, SCSC 1, 2.